G.R. No. 123708 - Civil Service Commission vs. Salas

On October 7, 1989, Rafael M. Salas was appointed by the PAGCOR Chairman as an Internal Security Staff (ISS) member.
He was assigned to work at the casino located at the Manila Pavilion Hotel.

On December 3, 1991, Salas’s employment was terminated by the Board of Directors of PAGCOR.
The termination was purportedly based on a loss of confidence following a covert investigation by PAGCOR’s Intelligence Division.
The intelligence report alleged that Salas engaged in proxy betting, a charge supported by:

Affidavits executed by two customers claiming that Salas used them as “gunners” on separate occasions.
Polygraph tests administered to the customers, which yielded corroborative and unfavorable results.

Following his termination, Salas submitted a letter of appeal on December 23, 1991, requesting reinvestigation by the PAGCOR Chairman and Board of Directors; his appeal was denied.
Salas then filed an appeal with the Merit Systems Protection Board (MSPB) on February 17, 1992.
The MSPB ruled that, as a confidential employee, Salas’s term of office had simply expired rather than being a case of dismissal.

CSC issued Resolution No. 92-1283, affirming the MSPB decision of expiration rather than dismissal, based partly on Salas’s classification as a confidential employee by operation of law.
Salas initially petitioned for certiorari before this Court to challenge the CSC resolution, but the case was referred to the Court of Appeals pursuant to Revised Administrative Circular No. 1-95.
On September 14, 1995, the Court of Appeals rendered a decision reversing the earlier CSC determination, ruling that Salas was not a confidential employee by applying the "proximity rule" and interpreting the relevant legal provisions.

The sole determinative issue revolved around whether Salas, by virtue of his appointment and functions as an ISS member at PAGCOR, could be considered a confidential employee.
Petitioners argued that:

PD No. 1869 explicitly classifies all casino and related service employees as confidential appointees.
Precedents, including the case of Philippine Amusement and Gaming Corporation vs. Court of Appeals, support the confidential classification.
CSC Resolution No. 91-830 reinforced the classification by operation of law.
The nature of Salas’s functions in the ISS inherently placed him in a confidential position.

It is the actual nature of an employee’s duties—not just the title or a statutory declaration—that determines if a position is primarily confidential.
An executive pronouncement like PD No. 1869 should be considered an initial classification, subject to review especially in case of conflicting evidence regarding the functions performed.

Whether Rafael Salas, as an Internal Security Staff member of PAGCOR, should be classified as a confidential employee.
Determining if the statutory declaration under PD No. 1869 and other related pronouncements conclusively establish his confidentiality.

If Salas were to be deemed a confidential employee, his termination would be seen merely as the expiration of his term of office rather than an illegal dismissal.
If not, the termination on the ground of loss of confidence might be subject to challenge as an act of dismissal lacking the required legal basis.

Whether the “proximity rule” applied by the Court of Appeals is the proper basis to determine the confidential nature of a government position.
How statutory provisions and constitutional safeguards interact in determining an employee’s security of tenure.